Is Mexico a Mature Market?

By: Cristina Kroll

Posted: August 18, 2014, from the September 2014 issue of GCI Magazine.

Although Mexico is one of the key markets for the cosmetics industry in Latin America, it is predicted to see the weakest growth of the region in the next five years. A drop in demand and low prices in the sector are thought to be the causes.

It is expected that Mexico’s cosmetics industry will grow by 4.6% between 2013 and 2018, going from a market value of $10.8 billion in 2013 to $13.5 billion in 2018.

In contrast, sales of cosmetics in the rest of Latin America are expected to see an average annual growth of 7.2% for the same period, led by Brazil, (9.3%), Bolivia, (8.8%), Guatemala, (7.5%), and Peru and Venezuela (7.4%). By 2018, the market value in Latin America will reach $111.8 billion. It is expected that sun care, hair removal, male grooming, baby care and dental care products will see the highest demand in the region over the next five years.

According to Euromonitor International, consumers in Latin America are also demanding products with multiple benefits, such as anti-aging foundations, nail polish with UV filter, and moisturizing bath products.

Peru’s Luxury Cosmetics Market to Hit $150 Million

The Peruvian luxury cosmetics market grew at a rate of 20-25% 2009-2013, according to estimates provided by The Estée Lauder Company. Esteban Antonijevic, country manager of Estée Lauder in Peru, told the newspaper El Comercio that the market is achieving annual sales of $150 million.

He also explained that, in spite of the significant growth shown in the last years, the luxury cosmetics market in Peru is behind Chile or Argentina, with $200 million and $350 million in annual sales respectively. According to the figures provided by Antonijevic, the demand is led by fragrances, accounting for 60% of sales, followed by makeup, a segment growing at a rate of 15%.

Antonijevic foresees that the luxury cosmetics market in Peru will continue growing by 20%, and that it will be bolstered by the country's economic stability and by the launch of new brands.

He announced that Estée Lauder was planning to launch the Coach line of fragrances in Peru in 2014 and Bobby Brown in 2015. He also said that the company would launch a Michael Kors makeup brand in 2015.

Latin American Regulatory Agreement

Chile, Colombia, Mexico and Peru (members of the Pacific Alliance) are working to build regulatory compliance for cosmetics. A statement referring to this commitment was made at the IX Pacific Alliance Summit held June 19, 2014.

On the basis of this statement, it is expected that governmental authorities will begin to change the regulations currently in force in the four countries. According to the Board of the Council of Associations of Latin American Cosmetics Industry (CASIC), this change and its results will become a regional and global benchmark for future regulatory matters in the sector.

CASIC states that this new regulatory cooperation will simplify the trade of cosmetic products among the members of the Alliance and open opportunities to work on similar initiatives with the 32 countries that participate in the Alliance as Observer States.

The presidents of the participating countries [Enrique Nieto (Mexico), Michelle Bachelet (Chile), Juan Manuel Santos Calderón (Colombia) and Ollanta Humala (Peru)] signed a Presidential Statement, which among other things, urges the countries to “formalize agreements on regulatory cooperation for the cosmetic sector.”